CDW 2012 Annual Report Download - page 80

Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the ordinary course of business, the Company is subject to review by domestic and foreign taxing authorities, including the Internal
Revenue Service (“IRS”). The Company is currently under examination by the IRS for the years 2008 through 2010. In general, the
Company is no longer subject to examination by the IRS, state and local or foreign taxing authorities for tax years prior to 2008.
Various other taxing authorities are in the process of auditing income tax returns of the Company and its subsidiaries. The Company
does not anticipate that any adjustments from the audits would have a material impact on its consolidated financial position, results of
operations or cash flows.
The Company accrues net interest and penalties related to unrecognized tax benefits in income tax expense in its consolidated
statements of operations. For the years ended December 31, 2012, 2011 and 2010 , the Company had no liability recorded for the
payment of interest and penalties on unrecognized tax benefits and did not recognize any such interest and penalty expense.
The Board of Managers of CDW Holdings LLC adopted the CDW Holdings LLC 2007 Incentive Equity Plan (the “Plan”) for
coworkers, managers, consultants and advisors of the Company and its subsidiaries. The Plan permits a committee designated by the
Board of Managers of CDW Holdings LLC (the “Committee”) to grant or sell to any participant Class A Common Units or Class B
Common Units of CDW Holdings LLC in such quantity, at such price, on such terms and subject to such conditions that are consistent
with the Plan and as established by the Committee. The rights and obligations of CDW Holdings LLC and the holders of its Class A
Common Units and Class B Common Units are generally set forth in the CDW Holdings LLC limited liability company agreement, the
CDW Holdings LLC unitholders agreement, and the individual Class A Common Unit and Class B Common Unit purchase/grant
agreements entered into with the respective unitholders.
On the closing date of the Acquisition (“the Closing Date”), certain eligible management investors purchased 44,028 Class A Common
Units and acquired 8,578 Deferred Units. The remaining 2,089,295
Class A Common Units were purchased by the Equity Sponsors and
certain other co-investors. The Class A Common Units are not subject to vesting. CDW Holdings LLC and the Equity Sponsors have
the right, but not the obligation, to repurchase Class A Common Units from Management Investors in certain circumstances. In
addition, certain Management Investors have the right to require CDW Holdings LLC to repurchase limited amounts of Class A
Common Units in the event of death or disability.
All remaining Deferred Units were converted to CDW Holdings LLC Class A Common Units during the year ended December 31,
2012.
Equity-Based Compensation Plan Descriptions
CDW has established certain equity-based compensation plans for the benefit of the Company’s coworkers and senior management.
Class B Common Units
As described in Note 10, the Board of Managers of CDW Holdings LLC adopted the Plan pursuant to which CDW makes grants of
Class B Common Units to senior management. The Plan limits the number of Class B Common Units that can be sold or granted to
250,000 units. As of December 31, 2012 , 216,483 Class B Common Units had been granted and were outstanding.
The Class B Common Units that were granted vest daily on a pro rata basis between the date of grant and the fifth anniversary thereof
and are subject to repurchase by, with respect to vested units, or forfeiture to, with respect to unvested units, the Company upon the
coworker's separation from service as set forth in each holder’s Class B Common Unit Grant Agreement.
Subject to certain limitations, immediately prior to a sale of the Company (as defined in each holder’s Class B Common Unit Grant
Agreement), all unvested Class B Common Units shall immediately vest and become vested Class B Common Units, if the unit holder
was continuously employed or providing services to the Company or its subsidiaries as of such date.
On June 30, 2011, the Board of Managers approved the terms of a modified Class B Common Unit grant agreement with John A.
Edwardson, who retired as the Company's Chief Executive Officer effective October 1, 2011 but
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10.
CDW Holdings LLC Equity
11. Equity-
Based Compensation